This invention relates generally to the field of systems for managing financial transactions and more specifically to systems for managing investments made on the behalf of investors by investment managers.
Some investors in securities, such as stocks and bonds, choose not to manage their own portfolios but instead rely on professional investment managers to manage and diversify their portfolios. One way to access the services of a professional investment manager is for an investor to buy shares in a mutual fund. In doing so, the investor is able to take advantage of a professional manager's expertise along with other investors. However, an investor in a mutual fund does not directly hold the assets purchased by the professional manager, thus the investor loses some of the tax benefits of directly holding an asset.
Another way that an investor can use professional investment managers and diversify a portfolio is by allowing a group of professional managers to directly manage multiple portfolios where the investor directly holds the assets in the multiple portfolios. This allows an investor to take advantage of a diversity of investment strategies and capture any tax benefits from directly holding an asset. However, this may create tax problems for the investor. For example, one manager may buy an asset too soon after another manager has sold the same asset, thus creating a “wash sale”. Another problem may occur when one manager buys an asset at the same time another manager sells the same asset, thus creating a taxable event for the investor without actually generating any income for the investor.
Therefore, a need exists for an investment management system that allows an investor to take advantage of the investment expertise from a variety of professional investment managers. In addition, the investment management system should allow the investor to reap the tax benefits from directly holding an asset without creating undue adverse tax consequences. The present invention meets such need.